North Riverside looks at fresh solution to pension nightmare
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With the election over, it’s time we turn to finding fresh solutions to the massive pension and other debt problems we face in Illinois. That’s what North Riverside officials have been trying to do with their firefighter pension fund and it’s a battle for all to watch.
Chicago faces a pension crisis. Communities all over the state face similar problems, particularly with police and fire pension funds. And Illinois, of course, is the state with the worst pension debt in the nation. That makes it even richer that the state is preparing to withhold sales tax revenues from communities that haven’t made their required pension payments. Illinois, of course, has skipped its own pension payments multiple times in the past.
Nonetheless, the state will begin garnishing sales tax revenue from North Riverside in 2016 if it doesn’t catch up on pension debt. The state can withhold all of that revenue in 2018, says Burt Odelson, North Riverside’s attorney. “When that happens,” he said, “North Riverside will no longer be able to pay their bills.”
North Riverside is a bedroom community without the home-rule power to raise taxes without voter approval. Most of its revenue is generated by sales taxes from the North Riverside Mall, but the village skipped pension payments for three years when the recession hit and tax revenue dropped.
The village now faces an operating budget deficit of $1.9 million, with $1.8 million due to pension obligations. The required payments to the firefighters’ pension fund have skyrocketed sevenfold in the last 10 years.
North Riverside says its contract with firefighters expired in April and it seeks to privatize its fire protection services, turning current firefighters into employees of a private company, PSI, which has provided paramedic services to the village for decades.
Current North Riverside firefighters would work for PSI at their current salaries and with their current health insurance plan. They also would keep already-accrued pension benefits but would be folded into a 401-(k) program at PSI that would include an employer-matching contribution. Odelson says privatizing fire services will save the village in insurance, overtime, sick time and pension costs for firefighters who make more than $200,000 in yearly salary and benefits.
But J. Dale Berry, lawyer for North Riverside Professional Firefighters Local 2714 and counsel to the Associated Firefighters of Illinois, says North Riverside is obligated to keep the contract’s current provisions while it proceeds through arbitration, which he says the village is trying to circumvent. The contract, he notes, has a clause forbidding the kind of subcontracting privatization the village seeks.
“They presented this as a fait accompli,” Berry says, noting officials rejected union offers for cheaper health plans, cost cuts and an offer to help organize a consolidation with other departments. “This privatizing thing is another way to open the door to patronage, nepotism, non-merit hiring,” Berry said.
Odelson says the union offers only add to pension commitments. “We are getting out of the municipal pension business. They want us deeper in.”
Clearly, the union is threatened and this case is tangled up in court and state labor relations board proceedings. Where does that leave North Riverside and hundreds of other communities like it?
Privatization doesn’t always work. It won’t be a viable option for every Illinois pension fund in crisis, but this looks like the makings of an idea that takes care of current firefighters while preventing the village from declaring bankruptcy or asking taxpayers for a significant tax hike it might not get.
Something’s gotta give. It’s time to consider any and all solutions to these intractable crises.
Madeleine Doubek is chief operating officer for Reboot Illinois.